HunterGreen

Hi,

I guess this is more or less off-topic, but hopefully someone can help shed some light on the following.

My parents (I'm a permanent resident, hubby a USC) live and work in my home country (Netherlands) and have no intention to relocate to the USA. They are still relatively young, my dad has his own business and my mom works parttime for a very flexible boss.
My dad has some money he wants to invest through the business and they are considering buying a house in our neighborhood, where they (and any other visitors from back home) could stay when visiting us. We're not sure what to do with it when nobody's here, maybe rent it out for short periods or something - but that's really not a concern right now.

We're more interested in finding out what comes into play here - could they just buy it here (they wouldn't need a mortgage for it), what are the tax consequenses? Is there anything else we need to be aware of?

And, also very important - are there any consequenses as far as the USCIS goes? My parents would travel on the VWP, would have no intention to stay, but owning a home in the US and having a daughter and grandchild (and son-in-law ) here, I can see how that would possibly raise red flags.

My apologies for not doing an extensive search for this myself, I'm kinda swamped right now and a possible winner is coming on the market soon... hopefully someone here knows something about this or can point me in the right direction.

Realtors in the Netherlands didn't have a clue, so that's not going to be any help. lol

Thanks!

Elaine

Ray

Thousand of europeans buy houses in florida every year ..,, it no problem at all ..If you rent it out there are taxes to pay ..but its all quite easy ..

HunterGreen

Maybe I should go pay the Florida forum a visit then.

Thanks, kameel.

NC Penguin

I'm not sure if a non-resident can buy a home and live in it on the Visa Waiver. I would imagine that the owners would need a Visitor Visa. Maybe others can chip in.



NC Penguin

scrubbedexpat099

B or VWP, both are non immigrant so matters not.

If they were of retirement age, would probably be easy for them to get a B2.

I thought half of Essex had villa's in Florida.

HunterGreen

To clarify: they wouldn't be living in it. A 10 day visit is about as long as they'll ever be over, and looking at it so far they'd do it 2, maybe 3 times a year tops. They are not of retirement age, but in their early 50's. They were young when they had me.

They own their home in the NL, like I said my dad owns his own business and is part owner of another, they have plenty of ties to the NL to show if need be.... at least in my eyes, but that doesn't help much. Hopefully someone will indeed chip in on this topic.

Ray, I'm having trouble with the Florida forums site btw... I've registered and all but when I try to read a thread it asks me to log in again... and again.... and again.... *fade*

Elaine

Ray

Its the anti riff raff device
Will pm you ..

Rete

Non-residents buy property in the US all the time. The tax issue that comes to mind for me is that they will have to pay property taxes annually to the city on the property. If there is no income from the property than any other taxes should be 0. Since they would be using it so infrequently, perhaps they might consider a mother/daughter type house or a two family and rent out the larger unit and each the smaller one for themselves and guests. If it is in your neighborhood and you have the time and inclination you and hubby could be the ones to manage it for them.

Or if they wished to visit warmer places and/or varied places, they might want to look into a time share where they could exchange their place with someone else in the plan who has a unit in another part of the country.

Many options for this type of thing.

NC Penguin

Surely, if your parents own a property and they stay in it, that would be described as "living in the house", even if it was as little as 10 nights.

Have you checked if the Netherlands and the US have tax reciprocity agrement? If not, your parents may end up paying taxes to both the US and the Netherlands for owning this overseas property.

If they really want to visit you up to three times a year for ten nights at a time, can't they stay with you? If they'd rather not and you say they are fairly well off, then why can't they stay in a nearby hotel?

I'm not trying to deter your parents from pursuing their plan but their may well be more involved than what you imagine and the time and costs involved may outweigh the benefits unless they live in the property for longer periods of time or visit more often.

Ray

What taxes .. you pay tax on earnings... they will pay property tax as everybody does .. thats it ...
If they rent it out different story ... they then have earning and will pay taxes on that ..although most of that is avoided with repairs and management costs...

Of course they should really buy in florida..who on earth would want to visit Ohio 3 times a year ...

snowbunny

Would the primary purpose of the home be to invest (the Dutch generally want a good return on investments ) or to have a holiday home?

It's difficult to own a rental property and make money at it unless you keep it more or less continuously leased; they should use a rental management company to find renters and make repairs (unless you and your husband are willing to take on this rather big responsibility). After all is said and done it can be hard to make any real return on one rental property.

If they wish to own a property in which to stay (and let friends stay), but rent it occasionally to offset the cost, then that's a different story.

The difference would be owning investment/rental property vs owning a second home. www.irs.gov has publications on determining which of the two categories the property would fall into, and how income and tax is determined varies considerably between the two.

fatbrit

http://www.irs.gov/businesses/small/...=105000,00.htm

or Google FIRPTA for other info on this potential pitfall.

DCMark

From an investment side, this is a very bad idea. For most mortgages, the house will need to be rented for a full 12 months annually to acheive a break-even (Expeneses+mortgage=rental income). Even then the costs are often more than the rental income.

If they only rent for short periods of time, they are expecting all investment activity to come from appreciation of the home value. The US is probably near the end of the 10%+ annual appreciation and in some areas homes may not appreciate at all.

They could stay at the Ritz and save money.

HunterGreen

I Googled it because the link didn't work.

Thanks, Fatbrit. If I understand it correctly, this means that if they would sell the house again they would have to pay income tax over it in the US? But they wouldn't have to if it's going to be used as a) the buyer's home and b) sells for less than $300,000. Right?

Snowbunny, I hope you had a great wedding day. They really want it as an investment of which they don't expect to make any profit. How's that sound.... it's true though.Thanks, I'll look into the (IRS) difference between the both.

Penguin, I'm not sure if it would be considered 'living in the house'. I didn't consider them to be living in our house when they came over last fall. But I'll look into it, thanks. Also, yes, there is a tax agreement, so that should be fine.

Rete, what exactly is a mother/daughter house? We would be the ones looking after it, we can see the place from our kitchen window and hubby works in construction (that's supposed to explain it all ).

Thanks everyone for your input, and there's room for more.

Elaine

HunterGreen

They wouldn't need a mortgage though, and they also aren't looking for a big profit. Your input is appreciated Mark, thanks.

Elaine